Appeal from Circuit Court, Multnomah County. Alfred T. Sulmonetti, Judge.
Frederic P. Roehr, of Vergeer, Samuels, Roehr & Sweek, Portland, argued the cause and filed a brief for appellant.
Raymond J. Conboy, Portland, argued the cause for respondent. With him on the brief were Donald R. Wilson, and Pozzi, Wilson & Atchison, Portland.
McAllister, Justice. O'Connell, Chief Justice, and Denecke, Tongue, Howell and Bryson, Justices.
This is not a suit in equity as it is described by the parties, but a declaratory judgment proceeding to decide the rights of the plaintiff Lorna Lee as the insured under a policy of liability insurance issued to her by the defendant State Farm Mutual Automobile Insurance Co. We have uniformly held that such a proceeding is in the nature of an action at law and governed by the same rules.*fn1
However, since the proceeding involves only the construction of a contract as a question of law we are not bound by the finding of the trial court, but are free to decide the question de novo.*fn2 The question is whether the "family-household exclusion" applies to plaintiff. If so, there is no coverage.
The facts are stipulated. State Farm issued a policy of automobile liability insurance in which the plaintiff Lorna Lee was a named insured. Plaintiff was riding as a passenger in her own automobile, which was being driven by her sister-in-law Nancy Darby. The car collided with a bus and plaintiff was injured. She sued both Nancy Darby and the bus company for damages and obtained a judgment against both for the sum of $40,000. The bus company paid $20,000 on the judgment on a covenant not to execute and the remainder of the judgment remains unpaid. Plaintiff contends that State Farm is obligated to pay her $10,000, the limit of its policy issued to her. State Farm contends that the family-household exclusion applies and there is no coverage. The trial court found for plaintiff. We reverse.
The applicable portion of the policy providing bodily injury liability coverage is Insuring Agreement I, Coverage A, providing for payment:
"* * * on behalf of the insured all sums which the insured shall become legally obligated to pay
as damages because of (A) bodily injuries sustained by ...